International Cat Speculators Since 2006

Archive for the ‘Business’ Category

Chelsea writes: “To the kind man who stopped on the northwestern motorway to help a blushing girl last Friday at 5.30pm. I had foolishly run out of petrol, when to my surprise Mr Floyd Ormsby of ‘Supreme Miracle Clean’ turned up with a petrol can. He promptly filled up my car, tapped my roof and headed off on his way.You were a total saviour …”

I would suggest that any small businessman (especially those with large ads already on the sides of their vehices) keep a spare can of petrol handy. This fellow’s just landed a glowing endorsement in the country’s most read column, but at the very least a grateful motorist will mention you to several friends.

I’m guessing $10 of petrol is both a lot cheaper and a lot more effective than most advertising out there!

“I allowed two men into my home to demonstrate a cleaning system,” says Jan. “It turned out to be one and a half hours hard-sell of a vacuum cleaner. I told them I wasn’t in the market for a $3000 vacuum, so they packed up. One asked to use the toilet. Later, I found he’d sprayed all over the seat and the floor.”

No Right Turn has changed his mind, and now considers anyone who opposes GST on food to be a facist bigot.

Ok, maybe not quite in those terms. But I’m sure that’s only a matter of time, now that he’s made his mind up.

So, low compliance costs (if we manage the change right), and positive health benefits. Against that, we have the simplicity of the tax system i.e. the intellectual purity of some bean-counter’s ideological schema. One of these things is worth more than the other, and it isn’t religious economics. I’ll take solid real-world benefits over pure thinking any day.

Now, part of his case is a study that shows people will purchase more food if GST is taken off. I’m not going to question that here, other than point to the Hawthorne effect – it’s entirely possible that part of the change was due to the study (and the nature of the study) itself. Whether or not the benefits would continue after the change becomes routine is quite another question.

Any introduction of a GST food exemption would create two potential sources of cost to business : namely, the one-off costs of the equipment to manage the exemption efficiently, and the ongoing costs of identifying and managing the distinctions between items that qualify, and those that don’t.

Gordon appears to be arguing that in Australia, the bar-coding system can solve these problems, as it’s standard across all retailers. The system identifies the exempt items to the retailer. Brilliant!

Um, no. That takes care of part of the issue. You can identify all you like, but it’s useless information unless someone listens.

What that means is that the barcode system can identify exempt items until it’s blue in the face, but unless the retailer’s systems are modified to accept that information and change the price calculation for each exempt item to exclude GST, nothing is going to change.

And doing that is a cost on each business. Worse, it takes a simple, easily replicated calculation and makes it horribly complicated.

Before: sum, then calculate GST

After: cycle through each item, test if GST applies, if not place in “exempt” total, if so, place in “not exempted” total, calculate GST on “not exempted” total.

Sure, it’s just making one small part of the system much more complicated. Except that software systems already are quite complicated. Discounts, stock, fly-buys, deli/butchery items… each of these creates relationships with each other item.

Adding one doesn’t make the system 10% more complex, it makes it 10 times more complex in the parts it affects. It means someone has to work out which of the other elements it interacts with, and how, and what the circumstances (which themselves will be complicated) of the exceptions are to those relationships. Then, it must be programmed, and tested. That could easily cost tens of thousands of dollars or more.

I’ve seen bugs in software, simply due, not to the complexity of any part, but due to the fact someone had (to stay within the supermarket example) forgotten to account for GST exceptions when someone on an account purchases something from a butchery and swipes their flybys.

Then there’s reporting & checking. Previously, with GST on everything an auditor could simply check the totals and a handful of existing exceptions – something that might take a few seconds. With this change, an auditor (or manager checking his reports) would have to go into a whole new level of complexity to check his reports, and take many times longer to check each item by hand for exemptions before doing his checking calculations. Sooner or later, someone is just going to put aside that difficult task, assuming that someone else understood and did everything correctly. Then, when the problem is finally identified deep within the system, the company has a massive liability issue.

Then, tomorrow we have another crazy idea (say, increasing GST on “unhealthy” products) that adds in another level of complexity again. And systems suddenly become another order of magnitude more complex.

My point is that this isn’t “the intellectual purity of some bean-counter’s ideological schema”. It’s real-world difficulties created by increasing complexities of systems, caused by bright ideas from people who’ve never worked a real day in their life.

Sure, much of this is hidden. It seems trivial to the outside observer, who never sees the actual work done. But it contributes to company overheads, which leads to increased prices in order to maintain margins.

Shareholders Association chairman Bruce Sheppard today defended Telecom, referring to the employment of chief executive Paul Reynolds who has more than 20 years with British phone giant BT.

He said Gattung was an internal appointment and he applauded the company for that but said they needed a change after clashing with a Government that was keen on regulation.

“Telecom needed fresh, external blood, it just did. Paul is a person who has dealt with structural and operational separation before at BT and he is a person who has a committed customer focus,” Sheppard said.

He said Reynolds should not receive a bonus after Telecom’s performance, but his base salary needs to be seen in the global context.

“Remember $3 million is only a million quid [pounds],” Sheppard said.

There are very, very few people who have the experience guiding a large company through a change like the Local Loop Unbundling that Telecom is currenly undergoing.

I’m quite sure that if such people were plentiful, the law of supply and demand would mean Telecom’s chief would be paid significantly less. So he is worth the money, but he’s certainly not going to get a bonus this year.

Hm, was it under Gattung that the disastrous decision to go to CDMA was made? I can’t remember. That decision was far, far worse than the decision to setup the XT network.

I am horrified that the frozen vegetable maker, Talley’s, is taking such a lackadaisical attitude to the contamination of packets of frozen peas. Up to 50% of their peas have been found to be black nightshade – a fairly poisonous berry. Have they ordered a recall? No. Have they shut down the line and checked their product? Apparently not. And the response of the New Zealand Food Safety Authority is “to give them a call”. A kick in the backside would seem more appropriate.

… Talley’s has these contaminated packets out in the community and all they can offer is a vague promise of a “review of its processes”. Their first complaint was six months ago and they are offering this wishy-washy garbage this week. …

It is perfectly possible some unsuspecting mother is mashing peas for her infant right now, not realising she is about to kill her child. If that is not motivation enough for Talley’s to recall it’s product and fix its systems, I don’t know what is.

…

MacDoctor’s advice to all is to stop buying Tally’s products immediately, throw out the stuff you have in your freezer and re-purchase a safer brand. If you are using any of their pea-containing products, under no circumstances give it to your children. Do not buy Talley’s products again until Talley’s:

Informs the public where the problem was and how they fixed it.

Apologies for it’s lackadaisical attitude.

He calls this a boycott.

Screw a boycott. When you boycott something, it’s to make a point that you will refuse something that will normally benefit yourself for the sake of a principle.

Frankly, not purchasing poison masquerading as healthy vegetables is common sense, as it refusing to purchase food from a company that doesn’t seem to care about the difference.

Ok, I’m going to stop now because this really, really makes me angry. Talley’s deserve to be driven out of business, and if this thing goes the way it should, that’s exactly what’s going to happen.

However, after reading the latest offering at Save the Humans, I should share that I own a book “Made in America” by Sam Walton, who started it.

It’s a great book, and written in real folksy language. It’s a story of a guy who was massively passionate about what he did. He quite simply lived and breathed retail and he knew that success could only come by giving value to the customer and looking after his employees.

Sadly, in order to find that book in the bookstore, I had to carefully search a bookshelf of miscellaneous business titles, after having made my way past large displays of anti-Wal-Mart books (one wonders why, since they don’t even have stores here and never will*), and others bashing various aspects of capitalism.

In fact my favourite story about Wal-Mart is when we went to buy a lawn mower there. There were two old guys pushing 90 running the section and the till. They have a young thing 1/4 their age who was 10x faster on the till but knew nothing about lawn mowers. These two knew everything, and between them all they made a great (if hillarious) team. But anyway…a customer came in wheeling a lawnmower that he had bought some weeks prior and mowed his lawn with a few times. He decided he didn’t want it anymore. They sent him to the refund desk, trailing grass all the way. As we left he was cheerfully getting a full refund. They would refund ANYTHING. In fact I’m sure most of it just went in the landfill out the back.

I recon that’s exactly how Sam would have wanted it, because those guys are going to come back, every time.

*For those in the US: we have The Warehouse, which Stephen Tindall runs along similar lines. Apparently it only took 50 faxes for him to get a tour of the Walton operation!

Currently if a company is struggling financially there are three groups of people who are likely to suffer; the company’s customers, the company’s investors and the company’s workers. Customers are normally in the best position as, unless they are dealing with a monopoly of sorts, at least they can take their custom elsewhere. The investors face a risk if they stick with a struggling company, but they also normally have the liquidity to escape quickly and invest their money elsewhere if they need to. In fact if anything investors have the most potential to exacerbate a situation for struggling businesses if they get too speculative and short term in their investments.

Workers on the other hand cannot easily transfer their loyalty from one company to another….

So someone who has sunk their entire life savings into a small/medium business (which is the most common business in NZ) can just walk away?!?

What planet do these people live on. How exactly do you sell a stake in a private business that’s failing? Answer: either you sell for a discount, or you don’t at all.

The reality is the opposite of the Greens’ claim – workers can easily walk away and find another job (although that depends on the job market) while investors are often left broken and penniless, long since trapped into a failing business.

Even in the share market, where liquidity is never a problem, you will not get your money back from a failing business. Think Feltex – as soon as the owners knew their business was in bad shape, the price nose dived, and thousands of people lost money. Many ended up with shares that were totally worthless, the share price bouncing from 1c to 2c and back again (and yes, some speculators did make money on that, or at least tried to) for shares that had previously been worth many many times that.

I recently heard a speech from a man who was retiring with what was rumored to be a $10m+ sale of his company. He described the risks that were undertaken by those starting the company. He explained that several of those who started the company could easily have gone into retirement flat broke. Yet, there was never the slightest chance that that might happen to any employee.

Finding a new job can be a months long project in good economic times and nigh on impossible in a local economy as that economy tightens and a major employer like PPCS, Fisher & Paykel or Carter Holt Harvey announces mass redundancies. And the consequences for workers who lose their jobs are on average far more significant to them and their families and communities than they are to the customers and investors of that same company.

While finding a new job can be hard during a time of mass redundancies, it is not impossible. It seems to me that we’re being told that any worker being kicked out of a job is always going to result in a months-long crisis. That’s simply not the case.

If employment laws are about ensuring fair outcomes and protecting those exposed to unfair risk, then redundancy is a crucial area to examine. Because that is when workers (as well as investors) are most exposed to risk. At the moment it doesn’t seem fair that everybody can potentially flee the scene of the crash except the workers who have the most at risk.

Yea, because while the owners take off and start another business, the workers are kept behind to take care of the paperwork and lawsuits. Or is it the other way around, that the workers go out and get another job and the owners….

I’ve never thought of it as a risk that my employer might stop paying me, because I can go out and get a job.

But I’ve always considered risk in starting or buying into any business, because I might loose what I invest.

Now, much of what the Greens say might be true, in some cases. But in the cases of most small businesses, those affected by today’s law change, it’s totally off base.

Heck, with reasoned posts like this, Whaleoil is in serious danger of becoming a blog to be read by normal people.

Much is being made by the Labour party, their lap-blog and other whining tossers about the 90 Day Bill.

Ok, so the first sentence is his normal “leg-cut-off,-I’ll-get-to-the-acid-later*” style, but the rest makes sense.

They all are saying that parliament and the public must be given a chance to debate the bill.

What the leftists fail to tell you is that this bill has largely been debated and been through the full select committee process already. It is substantially the same as Wayne Mapp’s bill and thus the argument hold about as much water as Cullen’s claims to have left the books in good order.

It’s also worth noting, since Phil Goff seems to think that the 90 Day bill is “arrogant and undemocratic”, that the Electoral Finance Bill was drafted in secret, in contravention of guidelines.

Astounding, isn’t it that a bill which actually changed our democracy is fine with Labour (until the lose the election) but actually giving employers the right to fire people is “undemocratic”, in spite of having very little indeed to do with voting.

Mapp drafted his bill publicly, took it through a first reading and select committee process, and then put it as a clear part of National’s manifesto.

A key point: one of the upsides of standing opposite Labour’s perpetual high-pitched screaming about National’s policy is that you can be very sure that no one was ignorant about the existence of this in the manifesto. If they didn’t want it, they shouldn’t have voted ’em in.

National was then elected on that basis. National is perfectly within their rights to pass this into law.

Further it redresses a balance that has been missing for sometime in workplace law. A worker can withdraw their labour whenever they want. They usually give notice but don’t have to. In times of near full employment this is often the case as workers get better offers. They can also ditch a shitbag boss freely as well.

The reverse is not true currently of employers. They essentially have to suck it up with no recourse. This law will provide at least some relief of that.

One might say that employers have power. Well, that might be true of employers of 1000+ employees, but those small employers covered by this bill are often strugling with limited resorurces, and this bill could easily be the difference between them hiring with confidence and going under – either by hiring bad staff or not feeling free to hire staff at all.

The Standard reveals some dangerous attitudes towards advertising and MBAs.

Why should universities, which are all publically-owned, be advertising to try and take students off each other? I mean, it’s one thing to compete on quality but this kind of vacuous ‘marketing’ nonsense just shows we’re losing our universities.

How confusing – so they can compete on quality, but they’re not allowed to put out public messages explaining why they are a quality education institution.

But even more fundamentally – who says they’re competing “to try and take students off each other”? One of the problems of marketing, is that it’s very easy to make ads that convince people that your product class is something to buy, but harder by far to convince people that yours is the one to purchase.

So a lot of what universities are doing is advertising education in general – increasing the size of the pie, not their own slice.

Universities were once places to learn how to think, to discover; they were places where you went to gain a broad range and real depth of knowledge. This ad and the emphasis on rubbish like MBAs shows they’re becoming places for preeners to network and get pieces of paper to show what great businessmen they are.

Clearly Mr Pierson (who wrote this) has an attitude problem towards business. He has no idea what it takes to run one, that is for sure. Yet, his party is one of the best at making it more difficult, meaning that the knowledge needed to run one is expanded by his own actions!

In fact, MBAs are a great example of “range and real depth” of knowledge. They also pay real money for the privilege – when I last checked, many times what any other course charges. Funnily enough, in the best programs you usually need to have experience in the real world to gain acceptance, which again comes back to my earlier point about the “size” of the pie.

If this country is to have a competitive internationally, we need top quality MBAs to run our businesses in the most efficient and flexible ways possible.

By our universities providing business courses, graduates also have an opportunity to be exposed to other diciplines in sciences and humanities, which is not always the case overseas where business schools are often a stand-alone concern.

It’s been missed in the fuss over the budget, but TVNZ have asked the goverment to split their compeditor, Sky TV, in half.

In a submission to be made public today, TVNZ calls for strict regulations to limit Sky’s growing dominance over free-to-air broadcasters, with sports fans now paying more than $14 a week to watch major sports events live.

TVNZ’s submission to the Culture and Heritage Ministry, which is reviewing broadcasting regulation, says sport is critical to the national identity and Sky has a virtual monopoly on coverage.

With a Sky TV sports subscription costing $64 a month, or $768 annually, “many New Zealanders are effectively paying a sports tax”, the submission says.

The public broadcaster wants marketplace rules introduced “to create a fair and level playing field for all”.

It suggests Sky be split into at least two businesses, one to make and buy programmes, the other to manage Sky’s satellite transmission network and set-tops boxes.

This is disgusting for multiple reasons.

1. Sky started and built it’s own business from the ground up. They had a good business model, and have given the customers what they want and have thus succeeded. They worked hard*, took the risks, and succeeded. They could easily have lost millions in this country had their hard work failed.

TVNZ on the other hand was built by the state, without competition for many years. Now they don’t like that competition and want state intervention again.

2. Perhaps they got an idea from what happened with Telecom? But this is nothing like Telecom. Telecom was a state monopoly, but was badly privitised. It has a massive hold on the phones of New Zealand. TVNZ is the former state monolopy here! They should be split to create a fair playing field.

3. What’s all this about “fair” anyway? Since when do failed business models get subsidised by the taxpayer? Warning bells always go off when I hear someone talking about “fair”. Too often they’re asking for something they don’t deserve.

4. “The submission calls for rules to stop Sky buying exclusive rights to events of “national importance”.” Oh yes, coverage of Super 14 is now a strategic national asset.

(I guess that means we can sell it to the Chinese, but not Canadians.)

*You’ve got to pity the sales men who have rung me from time to time, it’s a job that’s far from easy. 😉

About this Blog

This Blog is the long time home of a blogger known across the internet as ScrubOne (That's Scrub One not Scru Bone). Where this handle has not been available, he is known as ScrubOneHD (HD for Half Done).

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ScrubOne confesses to the Christian faith, and conservative politics but does not necessarily blog according to public perception of either.

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